The price standard for taxable houses will rise from W600 million to more than W900 million starting next year (US$1=W1,149). The current rates for the comprehensive real estate tax, 1-3 percent, will be reduced to 0.5-1 percent. The price standard for taxable commercial real estate will also be raised from W4 billion to more than W8 billion, while the tax rate will fall from the current 0.6-1.6 percent to 0.5-0.7 percent. The government will also reduce taxes for the elderly who have only one home by 10-30 percent. These are the main points of a government proposal announced Tuesday to reform the comprehensive real estate tax.

According to the government’s proposal, the number of households obliged to pay comprehensive real estate taxes will fall from 387,000 to 161,000, while the amount of that tax will drop by more than 60-90 percent compared to present levels. The government eventually plans to scrap the comprehensive real estate tax and incorporate it into the property tax. Opposition lawmakers and even some ruling party lawmakers are opposed to the proposal, saying it is a policy favoring the rich.

This dispute among politicians is the result of a lopsided view of the situation. Out of those who pay the comprehensive real estate tax, 35 percent make less than W40 million a year. There are quite a lot of pensioners and senior citizens among them. They are not your typical rich people and end up having to pay the comprehensive real estate tax simply because the homes they’ve been living in for a long time suddenly shot up in value. They must pay 46 percent of their income as property holding taxes, including the property and comprehensive real estate taxes. If you add other taxes and apartment maintenance fees, these people have to choose either to sell their homes or take out loans to pay their taxes. No other country in the world forces its citizens to make such drastic decisions.

Some people claim that property holding taxes are still low in Korea compared to advanced countries. It is true that the property holding tax is just 0.5 percent of apartment prices in Korea, compared to 1.5 percent in the U.S and 1 percent in Japan and Canada. But average Korean wages are far smaller, while average apartment prices are higher. That means Koreans actually shoulder a bigger tax burden.

It goes against the basic principles of taxation to demand heavy property holding taxes to maintain a sense of social fairness. In May this year, the International Monetary Fund recommended our government unify the property tax and collect them as local taxes, since they compensate for services offered by regional governments. The IMF was saying that there was no need to raise taxes simply because apartment house prices were too expensive. If social fairness must be considered, then it would be enough to incorporate the comprehensive real estate tax with the property tax and slightly modify the current progressive tax rate of 0.15-0.5 percent.

The comprehensive real estate tax is the result of a determination to treat a portion of the population as public enemies and punish them with exorbitant taxes simply because they live in expensive houses. The hypocrisy of the values of the tax’s proponents was revealed when they appeared, officiating and as guests, at a lavish wedding held recently on a golf course, while an airplane flew overhead dropping confetti. It is only proper to scrap the comprehensive real estate tax that has the potential to violate Constitutional rights and goes against the principles of taxation and look for alternative measures.